Obligations and Contracts Lecture Notes

General Provisions
Article 1156
An obligation is a juridical necessity to give, to do or not to do.
Q: What is an Obligation?
A: It is a juridical necessity to give, to do, or not to do
Failure to compel with the juridical necessity will subject the
debtor to a sanction
4 essential elements of an obligation:
1.
Active subject creditor or obligee; person who can demand the
fulfillment of an obligation
2.
Passive subject debtor or obligor
3.
Object or prestation object is any of to give, to do or not to do
4.
Efficient cause judicial tie or vinculum
Example: X agreed to give his car to Y
Active Y
Passive X
Object obligation to give the car
Efficient cause agreement
Giving (as prestation)
Called real obligation
2 types of real obligation
o
To give or deliver a specific or determinate thing (ex.
MY car)
o
to give or deliver a generic or indeterminate thing (ex.
A car)
Kinds of Obligation:

Viewpoint of Sanction
a.
Civil obligation can be obtained in court
b.
Natural obligation action has already prescribed but creditor
failed to demand within the prescriptive period. Despite the
prescription, debtor voluntary delivered payment. In this case,
debtor cannot get back what he paid
c.
Moral obligation ex. Hear mass
Q: What is the importance of differentiating a specific and generic
obligation?
A: Effects of the laws for the two obligations are different. In case of
fortuitous event (those which cannot be foreseen or can be foreseen but are
inevitable), liability to deliver specific obligations are extinguished. However,
this is not so in the case of generic obligations because you can still deliver
any other thing to the creditor which falls under the same class of the
obligation (genus does not perish)
To Do or Not to DO (as prestation)
called Personal obligation
are either affirmative or negative

Viewpoint of Person Obliged

a.
Unilateral only 1 party has an obligation to perform
b.
Bilateral 2 parties has an obligation to perform. Example:
contract of sale (buyer and seller)

Article 1157
Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.
1

Sources of Obligation (5)

The list is exclusive. Thus if the source is not one of the 5, then
there is no Obligation to speak of
1.
Law
2.
Contracts
3.
Quasi-Contracts
4.
Acts or omissions punished by law (delicts)
5.
Quasi-Delicts
Note: numbers 3-5 are also provided by law
Article 1158
Obligations derived from law are not presumed. Only those
expressly determined in this Code or in special laws are demandable, and
shall be regulated by the precepts of the law which establishes them; and
as to what has not been foreseen, by the provisions of this Book.
st

1 source LAW
Those derived from law should not be PRESUMED
Thus, you have to point out a specific provision of the law
This is provided by the Civil law and Special Law (SL should prevail
in case of conflict)
Article 1159
Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.
nd

2 source CONTRATCTS
Have the force of law between contracting parties
This must be complied with in GOOD FAITH
Requires consent from the parties; bound by the terms and
conditions of contracts
There are limitations for the right over the parties to stipulate
(they should not be contrary to laws, public policy, good customs,
morals, public order)
Principle of Liberty or Freedom of Contracts
Parties have the right to agree on terms and conditions as they
may deem it convenient, provided that such are subject to
limitation
Q: What are the essential elements of a contract?
A: meeting of the minds, consent of the cause and consideration
a.
Consent
b.
Cause
c.
Consideration

Good Faith not by the sword that killeth it but by the spirit that giveth life
(it does not make law inferior to a contract nor a contract superior than the
law)
Q: What are the difference of an obligation and a contract?
A:
OBLIGATIONS
CONTRACT
- Result of a contract
- Results to an obligation
- Not necessary require meeting of - Always presupposes a meeting
the minds
of the mind (consent of cause
and consideration)
NOMINATE AND INNOMINATE CONTRACTS
Nominate law has given a particular name for that contract
Innominate contracts with no specific name
a.
DO UT DES I give that you may give
b.
DO UT FACIAS I give that you may do
c.
FACIO UT DES I do that you may give
d.
FACIO UT FACIAS I do that you may do
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

Article 1160
Obligations derived from quasi-contracts shall be subject to the
provisions of Chapter 1, Title XVII, of this Book.

Damage the loss or the hurt or harm done to another which

usually results from the injury
Nature and Effect of Obligations

rd

3 Source QUASI CONTRACTS

Also provided for by Law (Chapter I, Title XVII of Civil Code)
No meeting of the minds
Q: What is a Quasi-Contract?
A: Juridical relation resulting from a lawful, voluntary and unilateral and
which has for its purpose the payment of indemnity to the end that no one
shall unjustly enrich himself at the expense of another

Real Obligation obligation to deliver a specific and indeterminate thing

Article 1163
Every person obliged to give something is also obliged to take care of
it with the proper diligence of a good father of a family, unless the law or
the stipulation of the parties requires another standard of care.
-

a.
b.

2 common kinds:
Negotorium Gestio unauthorized management
Ex. Neighbor saved you properties thus had expenses
Solution Indebiti undue payment

Article 1161
Civil obligations arising from criminal offenses shall be governed
by the penal laws, subject to the provisions of Article 2177, and of the
pertinent provisions of Chapter 2, Preliminary Title, on Human Relations,
and of Title XVIII of this Book, regulating damages.
th

4 Source ACTS OR OMISSIONS PUNISHED BY LAW or DELICT

Criminal liability carries civil liabilities
o
Restitution return the exact thing
o
Reparation pay equivalent price
o
Indemnification consequential damage
Article 1162
Obligations derived from quasi-delicts shall be governed by the
provisions of Chapter 2, Title XVII of this Book, and by special laws.
th

5 Source QUASI DELICT

Chapter 2 Title XVII of CC or Special Laws
Torts and damages
Basis: act of negligence or omission of care causing damage to
another with no pre-existing contractual relations
Q: When is there negligence?
A: Omission of that diligence which is required by the circumstances of
person, place and time
Q: When can an obligation arise from a quasi-delict?
A: The requirements are as follows:
1.
There must be fault or negligence
2.
There must be damage or injury
3.
There must be a direct relation of cause and effect between the
fault or negligence and damage and injury (the act of negligence is
the proximate cause of the damage)
What is important in quasi-delict is that you have to show that there is no
pre-existing contract between the parties
Take note: If the source is not any of the five sources stipulated, then in it is
not considered an obligation (article 1158)
Ex. Is an employer obliged to provide for legal service to his employee? No,
for the law does not require for such.
Dammum absque injuria (Damage without injury)
damage without legal injury
There is damage but there is no injury
There is no liability in this case
Injury illegal invasion of a legal right. You associate it with a
wrongful act or omission which will result to loss or damage
2

There is an obligation to give something: contemplates on

DETERMINATE OBJECTS ONLY
Purpose: ensure that the creditor will receive the object. Thus
debtor should take care of the object so as to deliver it to the
creditor
If generic, there is no need to practice good diligence of a father
In an obligation to deliver a specific thing, while still in the
possession of the obligor, he has the responsibility to take care of
such using ordinary diligence (diligence required in the absence of
any stipulation in law or contract)

Relate to art. 1173 the diligence needed is that which is required by the
NATURE of the obligation and corresponds with the circumstances of person,
time and place
EXCEPTIONS
If the law or contract provides for a DIFFERENT standard of care, said law or
stipulation must prevail (Art. 1163)
Extraordinary diligence required only if expressly provided by law or parties
expressly provided this in their contract
Good Father of a Family: Standard Care or Diligence given
Q: What are the other types of standards?
A:
a.
Slight by contract, this can be imposed
b.
Extraordinary diligence of very cautious persons; ex. Common
carrier custody (airplanes, bus, etc.)
c.
Utmost Diligence ex. imposed on banks
Article 1164
The creditor has a right to the fruits of the thing from the time
the obligation to deliver it arises. However, he shall acquire no real right
over it until the same has been delivered to him.
Delivery of fruits is only applicable to SPECIFIC obligations
Fruits three types contemplated in this article
a.
Natural spontaneous product of soil and young of animals
b.
Industrial acquire through industry or labor
c.
Civil rent, lease, interest
Q: what kind of right does the creditor have over the fruits?
A: distinguish personal right from a real right.
Personal enforceable only against another party
Real right enforceable against the whole world
Q: When does the obligation to deliver it arises?
A: This is qualifiable. It will depend on what is the source of obligation.

If pure obligation (not subject to any condition or term)- from the

time the agreement is entered into or is perfected (it is
demandable at once)

If the obligation has a term (X obliged himself to deliver a land to

Y on Nov. 15) the obligation arise upon the arrival of the term

If there is a conditional obligation- obligation arise when the

condition is fulfilled
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

This article contemplates on a situation where the debtor has not

yet delivered the obligation but that contract was already
perfected. In this case, you only have a PERSONAL right that will
compel the seller to deliver such obligation to the creditor. The
buyer thus asks what is due to him.
The moment the obligation arises, it is only a personal right. The
real right only happens upon delivery.

ILLUSTRATION
Sam is obliged to give Ben on December 1, 2008, a particular parcel of land

Prior to December 1 the creditor does not have any right over
the fruits

December 1 (without delivery yet) from Dec 1 to 15: he is

entitled to the fruits. However, this is only a personal right

December 15 (actual or constructive receipt) onwards he

becomes the owner of the fruits and the land only AFTER the date
of receipt (Real Right)
KINDS OF DELIERY
1.
Actual Delivery
the property changes hands
ex. The moment the book is given to you (buying of book: transfer
of possession)
2.
Constructive Delivery
The physical delivery is implied
Kinds of Constructive Delivery
a.
Tradition simbolica when you buy a house and the key of the
house is given to you
b.
Tradition longa manu the object is pointed to you
c.
Tradition brevi manu illustrated in a situation where the person
is occupying the property as a lessee or tenant. Such property is
bought by the tenant from the lessor. His possession is thus
changed from a lessee to an owner
d.
Tradition constitutum possesorium opposite of brevi manu.
Selling your own property to another but after the sale you enter
into a contract with the owner for you to occupy the property as a
lessee.
e.
Tradition by the execution of legal forms and solemnities when
you buy a parcel of land, you dont have to be physically placed on
the land. The documents will be considered as a delivery
Article 1165
When what is to be delivered is a determinate thing, the
creditor, in addition to the right granted him by Article 1170, may compel
the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the
obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing
to two or more persons who do not have the same interest, he shall be
responsible for any fortuitous event until he has effected the delivery.
-

The distinction between generic and specific obligation is

presented.
Specific if lost during fortuitous event, the obligation is
extinguished
Generic not extinguished because genus does not perish

st

1 par compel the specific thing which was to be delivered

Debtor cannot compel the creditor to receive another thing other
than that which was specified
nd
2 par debtor should deliver what belongs to the class not inferior or
superior of quality
You just deliver the regular type
If A lost the horse, B can buy to C and A will pay C
rd
3 par the term INTEREST refers to RIGHT
3

Even if the obligation is determinate, if two or more persons who

do not have the same interest is to receive such, the liability will
not be lost
Applies only to DETERMINATE THINGS

The third paragraph is an exception to the rule on specific obligations which

is lost due to fortuitous event
1.
If he incurs delay (obligor delays)
Q: When is there delay?
A: first distinguish ordinary delay and legal delay or default. What is
contemplated in delay here is the legal delay or default MORA (debtor fails to
comply with the obligation on the designated time). Delay happen when you
still fail to deliver after there has been a demand whether judicial or extra
judicial
Ordinary merely non performance at the stipulated time
Legal delay delay which amounts to a virtual non-fulfillment of the
obligation (principle behind is there is no delay if there is no demand)
Take note: A mere reminder with respect to the due date is not a demand.
From the time the demand is made, that is only when the debtor will be
liable for damages.
2.

If obligor is in bad faith because he promised to deliver the same

thing to two persons with different interest

Remedies of the Creditor when the Debtor fails to comply with his obligation
1.
Demand SPECIFIC PERFORMANCE of the obligation
2.
Demand RESCISSION or CANCELLATION
3.
Demand DAMAGES either with or without either of the first two
Article 1166
The obligation to give a determinate thing includes that of delivering
all its accessions and accessories, even though they may not have been
mentioned.
-

Accessions and Accessories: are included even if not specified in

the contract
Applicable only to DETERMINATE obligations

Accessions attachment that you can no longer separate unless you will
cause damage; additions to or improvements upon a thing

Accessories not attached but are necessary; those joined to or included

with the principal for the latters better use, perfection, or enjoyment
Take Note: So as to not violate this provision you shall stipulate in your
contract what are those accessories or accessions that you wish to exclude in
your sale.

Summary
Rights of Creditor in Determinate Obligation (both can be availed by the
Creditor)
1.
Compel specific performance includes delivery of accessions
Compel debtor to deliver the thing agreed upon
2.
Recover damages in case of Breach (article 1170)
Rights of Creditor in Generic Obligations
1.
Compel performance of obligation
2.
In case he refuses to comply or cannot comply, obligation may be
complied by another person at the debtors expense
3.
Recover damages in case of Breach (Mental damages)
Obligations of Debtor in Determinate Obligations
1.
Give the very same thing they agreed upon
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

2.
3.
4.

Take care of the thing with proper diligence (article 1163; applicable only
to determinate because generic things can never be lost)
Deliver accessions and accessories (article 1166)
Pay for damages in case of Breach (1170)

Obligations of Debtor in Generic Obligations

1.
Deliver a thing of its class which is neither of superior or inferior
2.
Pay for damages in case of breach
Article 1167
If a person obliged to do something fails to do it, the same shall
be executed at his cost.
This same rule shall be observed if he does it in contravention of
the tenor of the obligation. Furthermore, it may be decreed that what has
been poorly done be undone.
-

Is not in relation to article 1166

Contemplates on obligation TO DO or a PERSONAL OBLIGATION
Debtor cannot be compelled to do something he is asked because
this will result to INVOLUNTARY SERVITUDE (violation of
constitutional right; will result to act of violence
REMEDY: ask someone to do it but at the expense of the debtor
Example: if construction is ugly, you can have it undone

POSITIVE PERSONAL OBLIGATION

Remedies of the Creditor if the debtor fails to do

To have the obligation performed (by himself or by another) at

the debtors expense

Plus damages
When the thing may be ordered undone

If made poorly

If the obligation is a negative one (you are not suppose to do such

act but you do it) Art 1168
Q: When is 1167 NOT applicable?
A:
1.
If debtor posses special qualifications which is the very reason you
agreed in a contract (ex. Concert singers); REMEDY: damages
2.
If you tried to undo and in doing so, it will result to more damage;
REMEDY: you have to be logical and just ask for damages
Article 1168
When the obligation consists in not doing, and the obligor does what
has been forbidden him, it shall also be undone at his expense.
-

Self explanatory
Similar with article 1167 on the inapplicability
If the obligation is not to do and something is done, the creditor
has the right to have it undone at the expense of the debtor

Article 1169
Those obliged to deliver or to do something incur in delay from
the time the obligee judicially or extrajudicially demands from them the
fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that
delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when the
thing is to be delivered or the service is to be rendered was a
controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has
rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other
does not comply or is not ready to comply in a proper manner with what is
4

incumbent upon him. From the moment one of the parties fulfills his
obligation, delay by the other begins.
-

Talks about DEFAULT and DELAY

Covers the provision of no delay if no demand
Also provides for the exception of the need for the demand

Kinds of Default
1.
Mora Solvendi default on the part of the debtor
- Note: there is no default in negative and natural obligations
- Effects: (1) debtor may be liable for interest and damages; (2)
may bear the risk of loss; (3) may be liable even for fortuitous
event
2.
Mora Accipiendi creditor is guilty of default when he
unjustifiable refuse to accept the payment or performance at the
time such can be done
3.
Reciprocal Obligation depends upon each other for performance

Q: Why is it important to know the Delay?

A: so that you would know when to ask for damages
Q: When does Delay come in?
A: It comes in at the time the creditor makes a demand
Q: What is the purpose of setting the due date?
A: The due date will determine when the obligation is demandable
Q: Does the creditor always have to demand?
A: No, because there are some exceptions (look at book page 123-124)
a.
When laws expressly so declares or it is expressly stipulated in the
contract
TAKE NOTE: It is not enough that you only specify the date of the
expiry, rather it should be stipulated that the debtor will be at
default upon the arrival of such term or fulfillment of condition
b.
When time is of the essence time was so important that you
cannot have other time (ex. Birthday cake)
c.
Demand would be useless because it is beyond the debtors
power to perform (ex. If he already sold it to another)
d.
When obligation is RECIPROCAL: when one does not perform his
obligation, the other does not delay
Note: stipulations in contract prevails over law except if such contract is void
Mora latin term for delay
KINDS OF DELAY
1.
Mora Solvendi default on the part of the debtor
There is no mora solvendi in negative personal obligation
Requisites:
a.
The obligation must be due, enforceable, and already liquidated
or determinate in amount
b.
There must be non-performance
c.
There must be a demand, unless the demand is not required
d.
The demand must be for the obligation that is due and not for
another obligation, nor one with a bigger amount, except in
certain instances considering all the circumstances.
Effects:
a.
b.
c.

Debtor is liable for interest and damages

Debtor may bear the risk of loss
He is liable for fortuitous event

2.

Mora Accipiendi default on the part of the creditor

The obligation is already due, debtor complies but creditor
unjustifiably refuses to accept
Q: Why does this happen?
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

A: The creditors real intention was to reject the lessee (make it appear that
the debtor has not been paying rentals)
Take note: if you are a lessee, if the creditor unjustifiably refuses, you should
comply with tender of payment and consignation (legal procedure) so as to
legally relinquish or extinguish yourself with the liability. (This act is in
writing, consignation: deposit the money in court).
3.

Compensatio Morae when in a reciprocal obligation both

parties are in default; here it is as if neither is in default (both are
in pari de licto)
-

They are debtors and creditors to each other (ex. Contract of

lease and sale)

Article 1170
Those who in the performance of their obligations are guilty of
fraud, negligence, or delay, and those who in any manner contravene the
tenor thereof, are liable for damages.
Q: When are you liable for damages?
A: When there is
1.
FRAUD (deceit or dolo) deliberate or intentional evasion of the
normal fulfillment of an obligation (synonymous to BAD FAITH)
You can then be liable for bigger damages
2.

NEGLIGENCE (fault or culpa) any voluntary act or omission,

there being no malice, which prevents the normal fulfillment of an
obligation your damages can be mitigated

3.

DELAY (mora)

4.

CONTRAVENTION OF THE TERMS OF THE OBLIGATION debtor

does not comply with the agreement

This is also demandable but may be regulated by court

depending on the circumstance (can be mitigated)

Article 1173
The fault or negligence of the obligor consists in the omission of
that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the provisions of Articles 1171 and
2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to be
observed in the performance, that which is expected of a good father of a
family shall be required.
Defines what constitutes negligence
It is the Omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the person, of the
time and of the place.

Negligence is the failure to observe, for the protection of the

interests of another person, that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such
other person suffers injury (US vs. Barrias)

It is the want of care required by the circumstances

Accident and negligence are intrincically contradictory; one

cannot exist with the other. Accident occurs when the person
concerned is exercising ordinary care, which is not caused by fault
of any person and which could not have been prevented by any
means suggested by common prudence.

Note: There is really no fault in accidents because the person has practiced
ordinary care; while negligence is defined as the absence of such care.

Kinds of Damages (discussed in torts and damages)

1.
Moral ex. Damages for sleepless nights; not enough to allege,
you have to prove the extent of the damage
2.
Exemplary setting of an example to others. Deter them from
doing the same
3.
Nominal to vindicate your rights
4.
Temperate damages is not ascertain
5.
Actual this should be proven
6.
Liquidated damages already stipulated in the contract (common
in construction contracts: failure to finish the project on time)

Take Note: Negligence + Bad faith = fraud

Article 1171
Responsibility arising from fraud is demandable in all
obligations. Any waiver of an action for future fraud is void.

Ex. Assigning of the most competent person is an indication that there is a

foresight of danger. This cannot therefore be considered as an accident,
rather it is negligence.

Talks about FRAUD which is intentional and with malice

This is demandable on all obligation
Waiver of an action for future fraud is void because the law
does not want to encourage fraud. If waiver is allowed, it
will not deter the person in committing fraud.
Damages cannot be mitigated by the court

Q: Can a liability for a past fraud be waived?

A: Yes, such shows the generosity and forgiveness of the creditor towards
the debtor
Article 1172
Responsibility arising from negligence in the performance of
every kind of obligation is also demandable, but such liability may be
regulated by the courts, according to the circumstances.
-

Talks about negligence (quasi-delict)

5

TEST FOR DETERMINATION (When is there negligence)

You ask: Would a prudent man in his position foresee harm to the person
injured as a reasonable consequence of the course about to be pursued? If
so, the law imposes a duty on the actor to refrain from that course, or to take
precaution against its mischievous results, and the failure to do so
constitutes negligence. Reasonable foresight of harm followed by the
ignoring of the admonition born of this provision, is the constitutive fact of
negligence (Picart vs. Smith)

(1)

Reasonable care and caution expected of an ordinary prudent

person
Did the defendant in doing the alleged negligent act use
reasonable care and caution which an ordinary prudent person
would have used in the same situation. If not, then he is guilty of
negligence (Mandarin Vila, Inc. case)
Negligence is therefore a question of fact, its existence being
dependent upon the particular circumstances of each case.

Factors to be considered:
a.
Nature of the obligation you knew that the area was flammable
but you smoked. There is clear negligence
b.
Circumstances of the person you are on duty as a police guard,
you fell asleep not by reason of any ailment, then a robbery
occurred
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

c.
d.

Circumstances of time during night time you drove your car

without any headlight
Circumstance of Place while driving your car at colon street, you
drove at 60kph

(2)

No hard and fast rule for measuring degree of care

-

KINDS OF NEGLIGENCE (refer pg. 143-145 for comparison)

1.
Culpa Contractual negligence in contracts resulting in breach
Ex: you have a contract of common carrier (transportation
contract): passenger can file for damages against operator;
you can also demand for culpa criminal and for civil liability
2.
Culpa Aquiliana negligence which by itself is the source of an
obligation between the parties not so related before by any preexisting contract
3.
Culpa Criminal negligence resulting in the commission of a
crime
You will file an action against the driver. If the driver is
convicted but insolvent, the owner will be subsidiarily liable

Article 1176
The receipt of the principal by the creditor without reservation
with respect to the interest, shall give rise to the presumption that said
interest has been paid.
The receipt of a later installment of a debt without reservation
as to prior installments, shall likewise raise the presumption that such
installments have been paid.
-

FRAUD VS. NEGLIGENCE

to cause No such intention

Deliberate intention
damage or injury
Waiver of liability for future fraud is
void (includes gross negligence)
Liability cannot be mitigated

Talks about presumptions which could either be

(1) Conclusive or
(2) Disputable or rebuttable (what is contemplated in this article)
Presumption applies and is advantageous to debtor or lessee

Waiver is allowed
May be reduced in certain cases

Take note: this is Fraud in the performance of an obligation (dolo

incidente); REMEDY: damages
Ex. Instead of delivering a wine, what you deliver is a wine bottle however
what is inside is not wine, then this is dolo incidente; committed in the
performance of the obligation.
Dolo causante Fraud committed in the execution of the contract. Consent is
vitiated by fraud. You should not have entered the contract not unless there
was a fraud. REMEDY: annulment of contract.
Article 1174
Except in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which, though foreseen, were
inevitable.
FORTUITUIOUS EVENT
1.
Act of man
2.
Act of God
GR: no liability in fortuitous event
Exceptions
a.
When expressly declared by law
b.
When expressly declared by stipulation
c.
Nature of obligation requires assumption of risk

Requisites:
1.
Event happened without any participation of the debtor
(independent of his will)
2.
Event cannot be foreseen, or if foreseen is inevitable
3.
By reason of the event, it was impossible for him to comply with
the obligation in a normal manner
4.
There is no contributory negligence on the debtors part
Article 1175
Usurious transactions shall be governed by special laws.

Contemplated on USURY LAW. However, such law is no longer

applicable today
Thus, interests are based on the agreement of the contracting
parties, which is complied in Good faith
Rule: If there is consent or agreement, then that will govern the
relationship
However: even if USURY law is suspended, the SC reduced the
amount of interest imposable on the ground that the right is
inequitable or unconscionable (thus, the party is not totally free)

Conclusive you are no longer allowed to present other evidences to prove

otherwise
These are evidences which you cannot rebut (ex. We are all
presumed to know the law; thus you cannot defend yourself by
saying that you are not aware of such law)
- Such presumption is reasoned by experience and convenience
Disputable such fact is presumed unless you present other evidences that
will prove otherwise
Take Note: a creditor can refuse to accept if you do not pay the amount you
are obliged to pay
ST

1 paragraph of 1176
Tackles presumption in payments of INTERESTS
the first payment is that of the interest and the balance will be on
the principal.
TAKE NOTE: the creditor can rebut such claim wherein the lessee will say that
he has already paid the interest for the receipt shows payment for principal,
however the burden of proof is that of the creditor
The creditor can specify in the receipt a RESERVATION with regards to the
interest so that even though it is specified in the receipt that payment is for
the principal amount, there will be no presumption that the interest has
already been paid.
nd

2 paragraph of 1176
Tackles presumptions in payments of INSTALLMENTS
Ex. A receipt acknowledging the payment of rentals of march
gives the presumption that rentals for January and February is
paid
You can likewise, as a lessor, note the reservation
Q: What if no date is specified with regards to the month rental but the date
of the receipt is dated march, can this raise a presumption that payment for
January and February were made?
A: NO, because such date only tackles the date of receipt and not on the date
that corresponds to the payment of such
Take Note: Yearly Taxes are not installment payments and the law provides
for such presumption on installments alone!
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

Article 1177
The creditors, after having pursued the property in possession of the
debtor to satisfy their claims, may exercise all the rights and bring all the
actions of the latter for the same purpose, save those which are inherent in
his person; they may also impugn the acts which the debtor may have done
to defraud them.
-

Remedies of creditor when the debtor does not comply with the
obligation

1.

Demand for specific performance plus damages for failure to

comply with the demand of obligation
Pursue the properties belonging to your debtor
Avail of accion subrogatoria you can exercise the rights of your
debtor (ex. Debtor is the creditor of another person, you can then
exercise his rights to collect what the debtor could collect as a
creditor of another person)
Accion Pauliana you can receive impugn or rescind acts or
contracts done by the debtor to defraud the creditors (ex.
Fictitious sale: make it appear that it was sold when in fact it is
not; it is just to evade his liabilities )

2.
3.

4.

Article 1178
Subject to the laws, all rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the contrary.
-

Rights are transmissible except if

a.
Law provides otherwise consent of other party is
necessary
b.
Contract provides otherwise
c.
If the obligation is purely personal

angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

KINDS OF OBLIGATIONS (Classification)

PRIMARY
1.
Pure Obligation there is no condition or term to fulfill;
Demandable at the time the contract is perfected
2.
Conditional Obligation there is a condition which should be
fulfilled
a.
Suspensive the condition is awaited. The obligation
arises the moment the condition is satisfied
b.
Resolutory the condition is to be avoided. The
obligation is extinguished the moment the condition is
satisfied
3.
Obligation with a Period or Term that which necessarily must
come regardless of whether the parties know when it happen or
not
4.
Alternative or Faculative
5.
Conjunctive
6.
Joint there are more than one person who is liable for the
obligation. They have equal share of responsibility
7.
Solidary upon the insolvency of one of the parties who is
responsible for the obligation, the other party is to fulfill the full
liability of the contract
8.
Divisible the fulfillment of the obligation may be done at
separate times
9.
Indivisible the fulfillment of the obligation must be done at one
time
10. With a Penal Clause
SECONDARY
1.
Unilateral only one person or party has an obligation to perform
2.
Bilateral two parties has an obligation to perform
3.
Real right which is demandable upon the whole world upon the
delivery of the debtor of the obligation to the creditor
4.
Personal right of the creditor to demand upon the debtor the
delivery of the obligation as its due period has already lapsed
5.
Determinate specific object is the subject of the obligation
6.
Generic the subject of the obligation belongs to a particular
class
7.
Positive there is a need for the performance of the obligation
8.
Negative equivalent to omission; something should not be done
or is to be omitted
9.
Legal
10. Conventional
11. Penal
12. Civil obligation arises according the Civil law
13. Natural obligation arises according to natural law
Article 1179
Every obligation whose performance does not depend upon a
future or uncertain event, or upon a past event unknown to the parties, is
demandable at once.
Every obligation which contains a resolutory condition shall also
be demandable, without prejudice to the effects of the happening of the
event.
-

What is contemplated here are the types of obligations which are

DEMANDABLE at once
st
1 paragraph Simply stated: an obligation with no terms or
conditions is demandable at once
nd
2 paragraph: Resolutory conditions are also demandable at once
without prejudice to the extinguishment of the obligation once
the condition is fulfilled

Past Events would refer to the FUTURE KNOWLEDGE OF PAST EVENTS,

which will determine whether or not an obligation will arise

Classification of Conditions
A.
1. Suspensive (conditions precedent or conditions antecedent) the
happening of the condition gives rise to the obligation
2. Resolutory (conditions subsequent) the happening of the condition
extinguishes the obligation
B.
1. Potestative the obligation arises from the personal will of the debtor;
fulfillment of the condition depends upon the will of a party to the
obligation
2. Casual obligation depends on chance or hazard or the will of a third
person (winning of lotto)
3. Mixed depends partly on the will of the debtor and that of a third
person or on chance (if I pass the bar)
C.
1. Divisible capable of partial performance or realization
2. Indivisible not capable of partial performance because of the nature
of the thing, or because of the intention of the parties
D.
1. Positive an act is to be performed
2. Negative something will be omitted
E.
1. Express the condition is stated
2. Implied the condition is merely inferred
F.
1. Possible capable of fulfillment in nature and in law; condition is
capable of realization according to nature, law , public policy or good
customs
2. Impossible not capable of fulfillment due to nature or due to the
operation of law or morals or public policy; or due to a contradiction in its
terms
G.
1. Conjunctive when there are several conditions, all of which should be
realized
2. Alternative if only one or a few of the conditions have to be
performed or realized

Q: When is a pure obligation demandable?

A: At once, the moment you said such obligation or such contract has been
perfected. (Immediately)
Condition future and uncertain event
Period that which necessarily must come
Q: What is the effect of the happening of the resolutory condition?
A: The obligation is extinguished.
Article 1180
When the debtor binds himself to pay when his means permit
him to do so, the obligation shall be deemed to be one with a period,
subject to the provisions of Article 1197.
-

This provision contemplates on an obligation with a TERM or

PERIOD. The term is due upon the capacity of the debtor to pay
such obligation.
Payment does not depend on the debtors will, rather, what is
dependent on the debtor is the TIME when payment by him can
be made.

Q: How long is the term?

A: The term is not solely dependent neither on the creditor nor the debtor. In
this case, Article 1197 is also applied wherein the Court is obliged to fix the
duration of the period. Upon arrival of this period, the creditor can now
demand for the payment.

angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

Article 1181
In conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition.
-

This article contemplates on Conditional Obligations; that such

arises or is extinguished upon the fulfillment of the condition
Suspensive efficacy or obligatory force is subordinated to the
happening of a FUTURE or UNCERTAIN event
Resolutory rights are already acquired are lost once the
condition is fulfilled; Thus, there is a need to revoke the donation
first before extinguishment of the obligation is taken to effect.

This means that if the obligation is subject to a resolutory and potestative

condition, the condition is VALID (valid because it is already demandable at
once)
Article 1183
Impossible conditions, those contrary to good customs or public
policy and those prohibited by law shall annul the obligation which depends
upon them. If the obligation is divisible, that part thereof which is not
affected by the impossible or unlawful condition shall be valid.
The condition not to do an impossible thing shall be considered
as not having been agreed upon.

SUSPENSIVE CONDITION
Therefore, what is acquired by the obligee or creditor upon the constitution
of the obligation is only a mere hope or expectancy. Unlike other hope or
expectancies, however, it is protected by the law

Effects:
1.
2.

Q: What happens if the suspensive condition does not take place?

A: it is as if there is no obligation at all. The parties would stand as if the
conditional obligation never existed

3.

RESOLUTORY CONDITION
The obligation is immediately demandable after its establishment or
constitution. Unlike an obligation with a suspensive condition, rights arising
out of the obligation are acquired immediately and vested in the oblige or
creditor
Article 1182
When the fulfillment of the condition depends upon the sole will
of the debtor, the conditional obligation shall be void. If it depends upon
chance or upon the will of a third person, the obligation shall take effect in
conformity with the provisions of this Code.
-

DEBTOR
1.

2.

Simply means: if the condition is POTESTATIVE, the conditional

obligation is VOID
talks about an obligation subject to POTESTATIVE condition
(dependent upon the will of the debtor)
If condition depends upon chance it will take effect upon the
provision of this code (ex. I will give you 100 if I win the lotto; The
obligation is valid because it is dependent upon chance
If the condition is mixed the condition is also valid

Potestative and Suspensive

Both the condition and the obligation are VOID
Ex. I will give you 1M next month if I like
Potestative and Resolutory
Both the condition and the obligation are VALID
Ex. I will employ you now, but if in any event I decide not to
need your services, your contract will end

This article contemplates on the effects of Impossible and Illegal

conditions
If the condition is to DO and IMPOSIBLE or ILLEGAL thing, both the
condition and obligation is VOID
If the condition is a NEGATIVE (not to do the IMPOSSIBLE), you
DISREGARD the CONDITION but the OBLIGATION REMAINS
- In this situation, this becomes a PURE and VALID obligation
If the condition is a NEGATIVE (not to do an ILLEGAL), both the
condition and the obligation are VALID
- This only applies to obligations and contracts, not to
testamentary disposition or to donations

Take note: if some conditions in a contract are impossible to comply with,

the insurer cannot validly assert a breach of said conditions
Lecture Note:
If the obligation, however, is a pre-existing obligation, and therefore does
not depend upon the fulfillment of the condition for its perfection, it is quite
clear that only the condition is void, but NOT the obligation.
If the condition is NOT TO DO AN IMPOSIBLE THING, it shall be considered as
not having been agreed upon. Consequently, the obligation becomes pure
and immediately demandable
Article 1184
The condition that some event happen at a determinate time
shall extinguish the obligation as soon as the time expires or if it has
become indubitable that the event will not take place.
-

This deals with a POSITIVE CONDITION

Obligation subject to SUSPENSIVE CONDITION
Simply means that a condition which falls on a specific or
determinate time shall extinguish the obligation as soon as the
time expires or that it is sure not to take place
If the period is not fixed in the contract, the court , considering
the parties intentions, should determine what period was really
intended
Talks about an event to happen
Take Note: POSITIVE - EXTINGUISED

CREDITOR
1.
Potestative
Both the condition and the obligation are VALID
Ex. Ill give you my fountain pen if you desire to have it

Ex. I will give you a parcel of land if you marry X this year. If by the end of the
year, you still did not marry, the obligation of the debtor is extinguished.

Ex of mixed: I will give you 100 if I sell my parcel of land.

The selling is not solely dependent on the will of the debtor coz
such is as well dependent on the buyer or price

or if it has become indubitable that the event will not take place
Ex. On Nov. 15, X died, then the obligation is extinguished because you can
no longer marry

If it made to depend upon the will of the creditor valid

If upon the debtor void

Article 1185
The condition that some event will not happen at a determinate
time shall render the obligation effective from the moment the time
indicated has elapsed, or if it has become evident that the event cannot
occur.

Take note: the precept contained n the first sentence of Article 1182 is only
applicable only to a SUSPENSIVE CONDITION
9

angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

If no time has been fixed, the condition shall be deemed fulfilled

at such time as may have probably been contemplated, bearing in mind the
nature of the obligation.
-

This deals with a NEGATIVE CONDITION

Similar with 1184 however, what is contemplated is a condition
that some event will NOT happen at a determinate or specific
time.
The obligation is effective from the moment the time indicated
has elapsed or is evident that it cannot occur
If no specific date when the obligation is fulfilled: you consider the
circumstances surrounding the agreement; what is contemplated
by the parties

Take Note: NEGATIVE EFFECTIVE

Article 1186
The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
-

The condition shall be deemed fulfilled when the obligor

voluntarily prevents its fulfillment
Contemplates generally of SUSPENSIVE conditions
This deals with CONSTRUCTIVE or PRESUMED fulfillment
Requisites:
a.
Voluntary
b.
Actually PREVENTS fulfillment
Applicable to RESOLUTORY conditions if the DEBTOR is at FAULT
Ex. A sold land now to B on a condition that B should marry C
within 1 year, otherwise B should return the land. If A kills C, B
does not have to return the land because A is at fault.
Can only be applied to suspensive conditions and not to
resolutory conditions

Article 1187
The effects of a conditional obligation to give, once the condition
has been fulfilled, shall retroact to the day of the constitution of the
obligation. Nevertheless, when the obligation imposes reciprocal
prestations upon the parties, the fruits and interests during the pendency of
the condition shall be deemed to have been mutually compensated. If the
obligation is unilateral, the debtor shall appropriate the fruits and interests
received, unless from the nature and circumstances of the obligation it
should be inferred that the intention of the person constituting the same
was different.
In obligations to do and not to do, the courts shall determine, in each
case, the retroactive effect of the condition that has been complied with.
-

The effects of a conditional obligation to GIVE generally retroacts

to the day of the constitution of the obligation (applicable only to
CONSENSUAL contracts
Exception to the General Rule: with regards to FRUITS or
INTERESTS and PERIOD OF PRESCRIPTION (for reciprocal
obligations because it is presumed they are mutually
compensated; however, in a unilateral prestation, you should
deliver the fruits and interest unless it can be inferred that the
intention is otherwise)
In an obligation to DO, the COURT will determine the retroactive
effect of the condition

Scenario:
You have a date of the constitution of the obligation to the date
of the happening of suspensive condition (ex. In year 2004, I
obliged myself to give you a parcel of land if you pass the bar
examination)
Unilateral Obligation (example)
2004 date of the constitution of obligation
10

2008 date of happening of the suspensive condition

As far as the fruits are concerned: If the obligations are
UNILATERAL , the debtor shall appropriate the fruits and interests
received
In between the debtor is still the owner of the fruits

Reciprocal Obligation
in between (in pendency) fruits shall be deemed to have been
mutually compensated
Buyer is not obliged to pay interest, neither the seller obliged to
give the fruits
Why? Because it will be inconvenient between the parties to
compute the interest and fruits
Article 1188
The creditor may, before the fulfillment of the condition, bring
the appropriate actions for the preservation of his right.
The debtor may recover what during the same time he has paid by mistake
in case of a suspensive condition.
-

This article contemplates on (1) actions to preserve Creditors

Rights and (2) Right of the Debtor to Recover what was Paid by
Mistake
(1): bring appropriate actions for the preservation of his rights;
ask for security if debtor is about to be insolvent; ask the court to
prevent alienation or concealment
(2): This is a case of SOLUTIO INDEBITI

Q: Why is there a need for such provision?

A: So that while the condition has not yet happened, the creditors right is
safeguarded
Q: What can the creditor do to protect his rights?
A: You can have an annotation in the papers.
Take Note: During the pendency of the condition, the obligee or creditor has
only a MERE HOPE OR EXPECTANCY. The hope and expectancy is protected
by law. This is for the protection and preservation of his right. Without this
protection, the right of the creditor becomes meaningless.
Q: What is the appropriate action?
A: have the property annotated or registered in the registry of property
(caveat emptor). So whoever acquires the land will be bound to such
obligation.
Take Note: When the obligation imposes reciprocal prestations upon the
parties, the fruits and interests during the pendency of the condition shall be
deemed to have been mutually compensation.
Article 1189
When the conditions have been imposed with the intention of
suspending the efficacy of an obligation to give, the following rules shall be
observed in case of the improvement, loss or deterioration of the thing
during the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the
obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be
obliged to pay damages; it is understood that the thing is lost
when it perishes, or goes out of commerce, or disappears in such
a way that its existence is unknown or it cannot be recovered;
(3) When the thing deteriorates without the fault of the debtor,
the impairment is to be borne by the creditor;
(4) If it deteriorates through the fault of the debtor, the creditor
may choose between the rescission of the obligation and its
fulfillment, with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the creditor;
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

(6) If it is improved at the expense of the debtor, he shall have no other

right than that granted to the usufructuary.
-

if the obligation is to deliver a specific thing, 3 things can happen

during the pendency of the suspensive condition
a.
the specific thing promised to be delivered may be lost
b.
there is deterioration
c.
there could be improvements

Rules governing in these situations: (during the pendency of the condition)

Loss when it perishes, disappears, its existence is unkown
a.
due to fault of debtor the debtor is obliged to PAY DAMAGES
b.
not due to fault of debtor the obligation is EXTINGUISHED
Deterioration
a.
due to fault of debtor the creditor may choose between
recission of the obligation and its fulfillment with indemnity for
damages
b.
not due to fault of debtor the impairement shall be borne by the
creditor (creditor will accept)
Improvements
a.
by nature inure to the benefit of the creditor
b.
by passage of time - inure to the benefit of the creditor
c.
introduced at the expense of the debtor debtor have the right
than that granted to the usurfructuary (if improvement cannot be
removed without causing damage, then the debtor is not entitled
to the improvement. But if it can be removed without causing
damage, the debtor can remove such improvement)
Article 1190
When the conditions have for their purpose the extinguishment
of an obligation to give, the parties, upon the fulfillment of said conditions,
shall return to each other what they have received.
In case of the loss, deterioration or improvement of the thing,
the provisions which, with respect to the debtor, are laid down in the
preceding article shall be applied to the party who is bound to return.

Rescission (or Resolve) abrogates the contracts from its inception and
requires a mutual restitution of benefits received; its as if no contract has
been made (restore the parties to their relative positions)
TAKE NOTE: the cause must be IDENTICAL and the obligations should arise
simultaneously
Note: the right to rescind belongs to the Injured Party. The injured Party is
the one who has complied with his part of his obligation.
Characteristics of the Right to Rescind or Resolve
1.
Only exists in reciprocal obligations (note: if there is a period, you
cannot declare default before the expiration of the period)
2.
It can be demanded only if the plaintiff is ready, willing and able
to comply with his own obligations, and the other is not
3.
The right to rescind in NOT absolute (look at limitations)
a.
Trivial causes or slight breaches will not cause
rescission
b.
If there be a just cause for fixing the period within
which the debtor can comply, the court will not decree
rescission
c.
If the property is now in the hands of an innocent third
party who has lawful possession of the same
4.
The right to rescind needs judicial approval when there has
already been delivery of the object. However, if it is expressly
stipulated in the contract that despite delivery rescission can be
made without going to court, such contract remains valid.
The right to rescind need not have a judicial approval when there
has been no delivery yet

As for the obligations to do and not to do, the provisions of the

second paragraph of Article 1187 shall be observed as regards the effect of
the extinguishment of the obligation.
-

In short means: Once the resolutory conditions is fulfilled, the

obligation is extinguished
Because obligation is extinguished, the parties should restore to
each other what they have received this would include the fruits
and interests after deducting the expenses made for their
production, gathering and preservation
In this situation, the creditor becomes the debtor in his obligation
to return

Article 1191
The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent upon
him.
The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in either case. He
may also seek rescission, even after he has chosen fulfillment, if the latter
should become impossible.
The court shall decree the rescission claimed, unless there be just
cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who
have acquired the thing, in accordance with Articles 1385 and 1388 and the
Mortgage Law.
11

Power to rescind applies only to RECIPROCAL (created and

established at the same time, out of the same cause, and which
result in mutual relationship between the parties; the parties are
debtors and creditors to each other) obligations due to breach of
bad faith
REMEDY: either (1) fulfillment (file an action for specific
performance; demand the person in delay) + damages or (2)
rescission + damages (NOTE: the right is not conjunctive thus the
plaintiff CANNOT ask for BOTH remedies
Note however that you can file for rescission after choosing
fulfillment if the latter becomes impossible

Note: if the question is whether there was a violation in the

contract, you should go to court and resolve such.
5.
6.

The right to rescind is implied (presumed) to exist and therefore,

need not be expressly stipulated upon
The right to rescind may be waived, expressly or impliedly

Take note: extrajudicial rescission of a contract is not possible without an

express stipulation to that effect
Limitations on the Right to Rescind
a.
The power of the court to fix the period if there are minor
violations
b.
Resort to the courts
c.
Right of third person those who come into possession and is not
in bad faith are protected; in such case, the only remedy of the
injured party is to proceed against the party responsible for the
transfer or conveyance for damages
d.
Violations should be Substantial or serious so as to allow a
rescission of contract
e.
Waiver of the right (right to ask for a rescission)
Obligation of a Seller
1.
Deliver a car
2.
Transfer ownership

angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

Take note: if buyer, due to rescission, is obliged to return the car but
destroyed it, could no longer proceed in the process. This is because, if you
file for rescission, you should also be ready to return the object subject of the
obligation.

3.

Judicial the period or term fixed by the courts

1.

Ex die a period with suspensive effect. Obligation begins only

from a day certain, upon the arrival of the period
In diem term with a resolutory effect. Up to a time certain, the
obligation remains valid, but upon the arrival of said period, the
obligation terminates

2.

rd

If 3 party is in bad faith, the only remedy of the injured party is to proceed
rd
against the 3 person who acted in bad faith for damages. You can also go
rd
after both the seller and 3 party if both of them acted in bad faith.
Article 1192
In case both parties have committed a breach of the obligation,
the liability of the first infractor shall be equitably tempered by the courts.
If it cannot be determined which of the parties first violated the contract,
the same shall be deemed extinguished, and each shall bear his own
damages.

Condition when you are not even sure if something will happen as a fact or
not
Acceleration Clause clause which expressly stipulates that upon failure to
pay installment for a certain month, the whole debt should thereupon
become at once payable.
Take note:

In case both parties committed a breach:

o
Determine the first infractor he is to pay the liability
(but this can be tempered because both committed a
breach)
o
If it cannot be determined each shall bear his own
damages

CONDTITIONS WITH A TERM

Article 1193
Obligations for whose fulfillment a day certain has been fixed,
shall be demandable only when that day comes.
Obligations with a resolutory period take effect at once, but
terminate upon arrival of the day certain.
A day certain is understood to be that which must necessarily
come, although it may not be known when.
If the uncertainty consists in whether the day will come or not,
the obligation is conditional, and it shall be regulated by the rules of the
preceding Section.
Period
-

Contemplates on obligations with a period that such is

demandable only when that day comes
Certain length of time which determines the effectivity or the
extinguishment of obligations
Interval of time which either suspends its demandability or
produces its extinguishment

A lease on a month-to-month basis is one with a DEFINITE term.

In this kind of agreement, the lease is deemed from month to month, and
the lessor is allowed to terminate the lease after each month, provided there
is due notice.
REQUISITES FOR A VALID PERIOD OR TERM
1.
It must refer to the FUTURE
2.
It must be CERTAIN (sure to come) but can be EXTENDED
3.
It must be PHYSICAL and LEGALLY possible
Effect of a Fortuitous event
No one is still liable for this. The obligation is extinguished
Article 1194
In case of loss, deterioration or improvement of the thing before
the arrival of the day certain, the rules in Article 1189 shall be observed.
-

In case of loss, deterioration or improvement of the thing BEFORE

the arrival of the day certain, the rules in article 1189 shall be
observed
Contemplates on a SUSPENSIVE term

Article 1195
Anything paid or delivered before the arrival of the period, the
obligor being unaware of the period or believing that the obligation has
become due and demandable, may be recovered, with the fruits and
interests.
-

Note
Suspensive term only specifies when the obligation is demandable
-

Talks about PREMATURE payment

Simply means that a debtor can recover his payments of debts as
well as the fruits and interests if he paid before the arrival of
period and he was unaware that the time has not yet accrued.
Only apply to OBLIGATIONS TO GIVE

PERIOD vs. CONDITION

PERIOD
CONDITION
- event which must happen - is an uncertain event
sooner or later even if time (future and uncertain)
cannot be determined
Reference to time
- Always refers to- the - may under the law
future
refer to the past
Influence on the
- merely fixes the time or - Causes an obligation
obligation
the efficaciousness of an
to arise or to cease
obligation
Different Kinds of Terms and Periods
A
1.
Definite the exact date or time is known and given
2.
Indefinite something that will surely happen, but the date of
happening is unknown
B
1.
Legal period granted under the provision of the law
2.
Conventional or Voluntary period agreed upon or stipulated by
the parties
Fulfillment

12

Take note: if debtor knew that the arrival of period has not yet come but
paid, he can no longer recover what he paid for.
If both the debtor and creditor implicitly changed the period, the
debtor could no longer recover payment.
Q: Within what period must recovery be made if the debtor did not know
that payment was not yet due?
A: Before the debt matures (regarding what was paid). Even after maturity
(regarding interest) for after all the creditor was in BAD FAITH. But note that
the right prescribes 5 years after premature payment.
Article 1196
Whenever in an obligation a period is designated, it is presumed
to have been established for the benefit of both the creditor and the debtor,
unless from the tenor of the same or other circumstances it should appear
that the period has been established in favor of one or of the other.
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

The designation of a period is generally for the BENEFIT of BOTH

the creditor and the debtor
Ex. When there is INTEREST stipulated (debtor given enough
time to pay; creditor can earn from the interest)

General rule: creditor cannot demand performance of the obligation before

expiration of the period and debtor cannot perform the obligation before the
expiration of the period.
Note: this article applies if the setting of period is voluntary or conventional.
It is NOT applicable if period is set BY COURT (judicial)
-

(2) When he does not furnish to the creditor the guaranties or securities
which he has promised;
(3) When by his own acts he has impaired said guaranties or securities after
their establishment, and when through a fortuitous event they disappear,
unless he immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the
creditor agreed to the period;
(5) When the debtor attempts to abscond.
-

Exceptions:
o
Term is for the best of the debtor alone (debtor
required to pay only at the end)
o
Term is for the benefit of the creditor alone (creditor
can demand at any time, but he cannot be compelled
to accept payment before the expiration of the period)

He does not furnish the creditor the guarantees or

securities which he has promised (making a mortgage
in favor of a third person instead of the creditor)
o
By his own acts he has impaired said guarantees or
securities after their establishment; through fortuitous
event they disappear (the security will disappear)
unless he immediately gives new ones equally
satisfactorily

There are two situations in this provision

Take note: The security, if destroyed during the fortuitous event,
DO NOT extinguishes the obligation because this is not the real
subject of the obligation. The more because of the fact that such
is also a generic thing.
o
Debtor violates any undertaking
o
Debtor attempts to abscond (debtor tries to escape
the obligation is a sign of bad faith. Intent is sufficient)

Article 1197
If the obligation does not fix a period, but from its nature and
the circumstances it can be inferred that a period was intended, the courts
may fix the duration thereof.
The courts shall also fix the duration of the period when it
depends upon the will of the debtor.
In every case, the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once fixed
by the courts, the period cannot be changed by them.
-

If the obligation has no fixed period but there was a clear

intention to have one, the court may fix the duration thereof.
Court also fixes period if period is based on the will of the debtor
Applies only where a CONTRACT OF LEASE clearly exists

SUMMARY OF 3 INSTANCES THAT COURT FIX PERIOD

1.
If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended by the
parties
2.
If the duration of the period depends upon the will of the debtor (
I will pay you when I like or the day that I fix)
3.
If the debtor binds himself to pay when his means permit to do so

Debtor lose every right to make use of the period when:

o
He becomes insolvent, unless he gives a guaranty or
security for the debt
Q: When is a debtor considered insolvent? Should there be a
judicial proceeding or declaration?
A: Judicial declaration is not necessary in this case. He is insolvent
if his obligation exceeds his assets.

Article 1199
A person alternatively bound by different prestations shall
completely perform one of them.
The creditor cannot be compelled to receive part of one and part
of the other undertaking.
-

Person alternatively bound by different prestation shall

completely perform one of them
Creditor should not accept a portion of the different prestations

Note: once the date is fixed, parties could no longer change it

When the Court MAY NOT fix the Term
1.
When no term was even intended (PURE obligation)
2.
When obligation is PAYABLE on DEMAND
3.
When specific periods are provided for in the law (LEAGL PERIOD)
ex. Employment contract: time for payment of salary
Q: Within what period must the action to fix the period be brought?
A: within the proper prescriptive period for specific performance if a period
had been originally fixed, but to be counted from the perfection of the
contract
The PRESCRIPTIVE PERIOD IS 10 YEARS
Take Note: Court determines the period by considering the time probably
contemplated by the parties. The parties my of course change the period by
mutual agreement, or may even disregard the same in which case, the
obligation becomes a pure one, and demandable at once.
Article 1198
The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent,
unless he gives a guaranty or security for the debt;
13

Article 1200
The right of choice belongs to the debtor, unless it has been
expressly granted to the creditor.
The debtor shall have no right to choose those prestations which
are impossible, unlawful or which could not have been the object of the
obligation.
-

The right to choose which of the prestation should be acted upon

is on the hands of the DEBTOR unless it is EXPRESSLY granted to
the creditor
Debtor cannot choose those which are impossible, unlawful or
which could not have been the object of the obligation
1.
Those undertaking which are not included among those
from which the obligor may select
2.
Those which are not yet due and demandable at the time
the selection is made
3.
Those which by reason, is (changed looks because of fault)

Article 1201
The choice shall produce no effect except from the time it has
been communicated.
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

The choice among the alternative obligations should be

communicated ORALLY or WRITTEN (implied or expressed) to the
creditor before it takes effect

Note: any form may be employed provided that the other party is properly
notified of the selection
-

If the alternatives are lost due to the negligence or fault of the

debtor, the creditor have the right to indemnity for damages

Q: What is the basis for the indemnity?

A: the value of the last thing which disappeared or service which last become
impossible

Once choice is made, debtor can NO LONGER RENOUNCE IT and

take an alternative which was first open to him

Note: if alternative 1 and 2 are destroyed due to debtors fault but the third
is destroyed due to fortuitous event, the obligation is extinguished!

Note: once choice is communicated to the creditor, the obligation becomes

simple thus ceasing to be alternative.

Article 1205
When the choice has been expressly given to the creditor, the
obligation shall cease to be alternative from the day when the selection has
been communicated to the debtor.

Reason behind the need for Communication:

It is to inform the creditor that the obligation is now a simple one,
no longer alternative, and if already due, for the creditor to
receive the object being delivered
REQUISITES FOR THE MAKING OF THE CHOICE
1.
Made properly creditor or agent is informed
2.
Full knowledge that a selection is indeed being made
3.
Made voluntary and freely
4.
Made in due time before or upon maturity (otherwise, the
creditor can sue him in court with an alternative relief as give
this or that)
5.
Made to all the proper persons
6.
Made without the conditions unless agreed to by the creditor
7.
May be waived, expressly or impliedly
Article 1202
The debtor shall lose the right of choice when among the
prestations whereby he is alternatively bound, only one is practicable

Until then the responsibility of the debtor shall be governed by

the following rules:
(1) If one of the things is lost through a fortuitous event, he shall
perform the obligation by delivering that which the creditor
should choose from among the remainder, or that which remains
if only one subsists;
(2) If the loss of one of the things occurs through the fault of the
debtor, the creditor may claim any of those subsisting, or the
price of that which, through the fault of the former, has
disappeared, with a right to damages;
(3) If all the things are lost through the fault of the debtor, the
choice by the creditor shall fall upon the price of any one of
them, also with indemnity for damages.
The same rules shall be applied to obligations to do or not to do
in case one, some or all of the prestations should become impossible.
-

If only one of the prestations is left, then the debtor has no other
choice but to deliver it

If choice is expressly given to the creditor, the latter shall also

communicate his choice to the debtor
rd

Q: What are the instances where an alternative obligation becomes simple?

A:
1.
When the choice has been communicated
2.
When the choice has not been communicated, but by some
circumstances only 1 is left to be practicable

Note: right of choice can also be expressly granted to a 3 person. (should be

agreed upon by the parties)
SUMMARY OF RULES (1204 AND 1205)
Right of Choice Belongs to the Debtor
Loss

Article 1203
If through the creditor's acts the debtor cannot make a choice
according to the terms of the obligation, the latter may rescind the contract
with damages.
-

If through the creditors acts the debtor cannot make a choice

according to the terms of the obligation, the debtor may rescind
the contract with damages

Note: the contract is NOT AUTOMATICALLY RESCINDED. Debtor may allow

the obligation to remain in force insofar as the possible choice or choices are
involved.
Article 1204
The creditor shall have a right to indemnity for damages when,
through the fault of the debtor, all the things which are alternatively the
object of the obligation have been lost, or the compliance of the obligation
has become impossible.
The indemnity shall be fixed taking as a basis the value of the
last thing which disappeared, or that of the service which last became
impossible.
Damages other than the value of the last thing or service may also be
awarded.

14

1.

2.

Fortuitous Event
a.
All objects - obligation is extinguished
b.
One or some debtor chooses from the remainder
Fault or negligence of the Debtor
a.
All objects obligation is NOT extinguished; object
converted to monetary-liable value; value of object
which last disappeared; damages
b.
One or some choose from the remainder but creditor
cannot claim for damages

Right of Choice Belongs to the Creditor

Loss
1.
Fortuitous Event
a.
All objects obligations is extinguished
b.
One or some creditor chooses from the remainder;
no liability on the part of the debtor
2.
Fault or negligence of debtor
a.
All objects value of any subject chosen plus damages
b.
One or some chose any object, lost or not. If object
chosen is already lost value plus damages; if not lost
no damages
Article 1206
When only one prestation has been agreed upon, but the obligor
may render another in substitution, the obligation is called facultative.
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

The loss or deterioration of the thing intended as a substitute,

through the negligence of the obligor, does not render him liable. But once
the substitution has been made, the obligor is liable for the loss of the
substitute on account of his delay, negligence or fraud.
-

Contemplates on FACULTATIVE OBLIGATION

o
It is one where only one prestation has been agreed
upon but the obligor may render another in
substitution

ALTERNATIVE VS. FACULTATIVE OBLIGATION

ALTERNATIVE
1. If object 1 is lost due to fortuitous
event, debtor will have to deliver
object 2
2. Various things are due, but the
giving of one is sufficient
3. If one of the prestation is illegal,
the others may be valid and the
obligation remains

4. If it is impossible to give all except

one, that last one must still be
given

5. The right to choose may be given

either to debtor or creditor

FACULTATIVE
1. If object 1 is lost due to fortuitous
even,
the
obligation
is
extinguished (no need to deliver
object 2)
2. Only one thing is principally due
3. If the principal obligation is void,
and there is no necessity of giving
the substitute. (the nullity of the
principal carries with it the nullity
of the accessory or substitute)
4. If it is impossible to give the
principal, the substitute does not
have to be given; if it is impossible
to give the substitute, the
principal must still be given
5. The right of choice is given only to
the debtor

Q: When does the substitution take effect?

A: in order that the creditor will be bound by the substitution, it is necessary
that the debtor must communicate such fact to the creditor
Q: What is the effect of loss of substitute?
A: before the substitute is made by the obligor, the loss or deterioration of
the thing intended as a substitute, through the negligence of the said obligor,
does not render him liable.
Once the substitution has been made, the debtor shall be liable for loss or
deterioration.
JOINT AND SOLIDARY OBLIGATION
Article 1207
The concurrence of two or more creditors or of two or more
debtors in one and the same obligation does not imply that each one of the
former has a right to demand, or that each one of the latter is bound to
render, entire compliance with the prestation. There is a solidary liability
only when the obligation expressly so states, or when the law or the nature
of the obligation requires solidarity.
-

Simply means that you do NOT render or demand the ENTIRE

compliance with the prestation to yourself

Note: Solidary liability arises only if it is expressly stipulated in the contract,

or when the law or the nature of the obligation requires solidarity.
JOINT VS. SOLIDARY OBLIGATIONS
- Joint each obligor answers only for a part of the whole liability and to
each obligee belongs only a part of the correlative rights
- Solidary or Joint and Several the relationship between the active and the
passive subjects is so close that each of the former or of the latter may
demand the fulfillment of or must comply with the whole obligation. (can
ask for reimbursement to others who are liable or subject to receive)
15

Remember: if there is only one debtor and creditor, the rules in this article
DO NOT apply

GENERAL RULE (when there are 2 or more debtors or creditors): JOINT

In the absence of any fact or law which would make the
defendants solidarily liable, the presumption is that they are only
JOINTLY liable
Exceptions:
a.
There is a stipulation in the contract that the obligation is solidary
b.
When the nature of the obligation requires liability to be solidary
c.
When the law declares the obligation to be solidary
Article 1208
If from the law, or the nature or the wording of the obligations
to which the preceding article refers the contrary does not appear, the
credit or debt shall be presumed to be divided into as many shares as there
are creditors or debtors, the credits or debts being considered distinct from
one another, subject to the Rules of Court governing the multiplicity of
suits.
-

Talks about the general rule when there are 2 or more debtor or
creditor
CONSEQUENCE:
o
The debt shall be divided into as many shares as there
are creditors or debtors
o
The credit or the debts will be distinct from one
another, BUT regarding the brining of the action in
court, the Rules of Court governing the multiplicity of
suits will be followed

PRINCIPLES (JOINT OBLIGATION)

A. Joint obligation is presumed by law
B. In joint obligations, the creditor is entitled to a proportionate part
of the credit and the debtor is liable only to a proportionate part
of the debt (to each his own)
C. The debts or credits are being considered distinct and separate
form one another subject to the rules of court governing the
multiplicity of suits
Note:
Courts FINAL JUDGMENT outweighs stipulations in contracts.
CONSEQUENCES OF JOINT LIABILITY
1.
Vitiated consent on the part of one debtor does not affect the
others
2.
Insolvency of one debtor does not make others responsible for his
share
3.
Demand by the creditor on one joint debtor puts him in default,
but not the others since the debts are distinct
4.
When the creditor interrupts the running of the prescriptive
period by demanding judicially form one, the others are not
affected
LIABILITIES OF PARTNERS
1.
If it arises out of CONTRACT, the liability is JOINT or pro rata.
Exception claiming compensation for employees death in line of
duty
2.
It if arises out of a CRIME or a QUASI-DELICT, the liability is
SOLIDARY
Article 1209
If the division is impossible, the right of the creditors may be
prejudiced only by their collective acts, and the debt can be enforced only
by proceeding against all the debtors. If one of the latter should be
insolvent, the others shall not be liable for his share.
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

Contemplates on INDIVISIBLE JOINT OBLIGATION (joint with

respect to the parties but indivisible with respect to the
fulfillment of the obligation)
Fulfillment of obligations requires the consent of all the debtors,
although each for his part. On the side of the creditors, collective
action is also required for acts which may be prejudicial.

Characteristics:
1.
Creditor must proceed against ALL the joint debtors, for
compliance is possible only if all the joint debtors would act
TOGETHER
2.
Demand is made on ALL the joint debtors
3.
If any of the joint debtors be insolvent, the others shall not be
liable for his share
4.
If there is joint creditors, delivery must be made to all, unless
someone is specifically authorized by the others
5.
Each joint creditor is allowed to renounce his proportionate credit

Each solidary debtor, insofar as the creditor or creditors are concerned, is the
debtor of the entire amount; however, with respect to his co-debtors, he is a
debtor only to the extent of his share in the obligation.
Article 1212
Each one of the solidary creditors may do whatever may be
useful to the others, but not anything which may be prejudicial to the
latter.
-

Note: A demand by one joint creditor is not a demand by the others

Article 1210
The indivisibility of an obligation does not necessarily give rise to
solidarity. Nor does solidarity of itself imply indivisibility.
-

The indivisibility of an obligation does not necessarily give rise to

solidarity. Nor does solidarity of itself imply indivisibility

Article 1213
A solidary creditor cannot assign his rights without the consent of the
others.
-

In effect you can have a joint divisible obligation (ex. Monetary obligation),
joint indivisible obligation (ex. Car), solidary divisible obligation, solidary
indivisible obligation
Indivisibility refers to the SUBJECT MATTER
Solidarity refers to the TIE BETWEEN THE PARTIES
DIFFERENT KINDS OF SOLIDARITY
1.
Active Solidarity on the part of the creditor or obligee
2.
Passive Solidarity on the part of the debtor or obligor
3.
Mixed Solidarity on both parts
4.
Conventional Solidarity agreed upon by the parties
5.
Legal Solidarity that imposed by law
Article 1211
Solidarity may exist although the creditors and the debtors may
not be bound in the same manner and by the same periods and conditions.
Debtors may still be solidarily liable despite the difference on
terms or conditions
To do: the whole solidary obligation can be recovered from ANY
of the solidary debtors MINUS the share of those with unmatured
conditions or terms
EFFECT OF ACTIVE SOLIDARITY (it will only happen if the obligation stipulates
or the law so provides or the nature of the obligation so requires)

Solidary creditors may do useful, not prejudicial acts

o
Beneficial to interrupt the running of prescription
Note: the prescription of actions is interrupted when
they are filed before the courts
Ex. You demand full payment from debtor will stop the
prescriptive period
o
Prejudicial remission or condonation
Note: as far as the solidary creditors are concerned, the creditor
who performed the act shall incur the obligation and damages to
his fellow creditors

GR: a solidary creditor cannot assign his rights without consent of

the others
Reason for such rule: because such obligation implies mutual
agency and mutual confidence. If a creditor does acts that is
prejudicial to the others, then their rights are endangered, hence,
the necessity of their consent.
Criticism: at some cases, there is really no TRUST that exists
between two solidary creditors when the reason why they
became solidary is due to the operation of law (except when it
arises from voluntary contracts)
If one of the creditors assigned without consent and the person
assigned collects from the debtor, such collection is not
considered valid. This is to avoid connivance so as to result
extinguishment of obligation through payment
rd
Note: debtor can also refuse to pay 3 person if the latter claims
to have been assigned by one of the creditors.

Q: what if assignment was made in favor of another solidary creditor without

the consent of the other creditor?
A: there is no violation. In such case there can be no invasion of the personal
or confidential relationship among the solidary creditors.

Mutual Agency each creditor is empowered to exercise against the debtor

or debtors not only the rights which corresponds to him, but also all the
rights which correspond to the other creditors, with the consequent
obligation to render an accounting of his acts to such creditors.
Anyone of the creditors can collect the full amount from the debtor but he
must make an account and reimburse the shares of his fellow creditors

Article 1214
The debtor may pay any one of the solidary creditors; but if any
demand, judicial or extrajudicial, has been made by one of them, payment
should be made to him.
-

Simply contemplates to whom the debtors must pay

o
To any of the solidary creditors (if there is no demand
made)
o
Exception: payment must be made to solidary creditor
who made a demand (judicial or extrajudicial)
Note: if one of the creditors already sued for action, it is essential
that the first action be first terminated before other creditors
could demand. However, if the first action was just an
extrajudicial demand and the debtor does not pay, the other
creditor may now file a judicial demand.

EFFECT OF PASSIVE SOLIDARITY

Anyone of them is compelled to make the full amount but has the right to
obtain reimbursement from other debtor plus the interest.

16

Article 1215
Novation, compensation, confusion or remission of the debt,
made by any of the solidary creditors or with any of the solidary debtors,
shall extinguish the obligation, without prejudice to the provisions of Article
1219.
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

The creditor who may have executed any of these acts, as well as
he who collects the debt, shall be liable to the others for the share in the
obligation corresponding to them.
1.

2.

Contemplates on the different prejudicial acts of the creditor

Effect: shall extinguish the obligation, without prejudice to the
provision of article 1219 (look at the provision)
Novation
Modification of an obligation by changing its object or
principal conditions, or by substitution the person of the
debtor, or by subrogating the person of the debtor, or by
subrogating a third person in the rights of creditor
It gives rise to a new obligation
Compensation
Takes place when two persons, in their own right, are
creditors and debtors of each other
May be total or partial depending on the amount involved

3.

If a solidary debtor receives extension, the other debtor does not

get the same extension. If a principal debtor receives an extension
without the suretys consent, the surety is released.

In suretyship, there is but one contract, and the surety is bound

by the same agreement which binds the principal
Demand on the sureties is not necessary before bringing suit
against them since the commencement of the suit is sufficient
demand
A surety is not entitled to be given notice of the principals default

Note: guarantor your liability is subsidiary. Creditor should first demand

from the principal. It is only when the principal is insolvent that the creditor
could go after the guarantor
Article 1217
Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.

Total Compensation: automatically extinguish the obligation

3.

Confusion or Merger
Takes place when the characters of creditor and debtor are
merged in the same person (original debtor eventually
becomes a creditor of his own payment)
Usually happens when the creditors endorse debtors
payment to another person and such person endorses the
payment back to one of the debtors.
In this case, the solidary obligation is EXTINGUISHED

He who made the payment may claim from his co-debtors only
the share which corresponds to each, with the interest for the payment
already made. If the payment is made before the debt is due, no interest for
the intervening period may be demanded.
When one of the solidary debtors cannot, because of his
insolvency, reimburse his share to the debtor paying the obligation, such
share shall be borne by all his co-debtors, in proportion to the debt of each.
-

4.

Remission or Waiver
Act of pure liberality whereby a creditor condones the
obligation of the debtor. (tells the debtor forget about the
whole thing)
Remission may be TOTAL or PARTIAL (in partial, can remit
only one of the debtors obligation)
In this case, the co-debtor in a total remission benefits from
the act of remission

Article 1216
The creditor may proceed against any one of the solidary debtors
or some or all of them simultaneously. The demand made against one of
them shall not be an obstacle to those which may subsequently be directed
against the others, so long as the debt has not been fully collected.
-

The creditor may proceed against anyone of the solidary debtors

or some or all of them simultaneously so long as the debt has not
been fully collected
A suit filed against one does not mean a waiver on filing a suit
against the other debtors in the future. The creditor may do so if
he wants to.
Note: this applies only to PASSIVE SOLIDARY (or mixed solidarity)
obligations, not joint because in the latter, you cannot let one of
the debtor pay for the others debt.

PASSIVE SOLIDARITY VS. SURETYSHIP

Surety Case: Palmares vs. CA (look at bullet points for SCs decision)
Similarity
1.
Both the solidary debtor and the surety (assumes a solidary role)
guarantee for another person
2.
Both can demand for reimbursement
Difference
1.
The solidary debtor is indebted for his own share only; the surety
is indebted only for the share of the principal debtor
2.
Solidary debtor can be reimbursed what he paid MINUS his share;
surety can be reimbursed by the whole amount he paid for
17

Payment made by one of the solidary debtors extinguishes the

obligation
He who made the payment may claim from his co-debtors only
the share which corresponds to each, with the interests for the
payment already made
When one of the solidary debtors cannot reimburse his share due
to his insolvency, such share shall be borne by all his co-debtors,
in proportion to the debt of each. (insolvency of one should be
shouldered by the rest)

Payment one of the ways which an obligation is extinguished

Consists in the delivery of the thing or the rendition of the service
which is the object of obligation
Summary to whom shall the solidary debtor pay:
1.
Any of the solidary creditor
2.
If there was a demand to the demanding creditor only
3.
If there were 2 or more demands to the first who demanded
(priority in time is priority in right)
4.
If there were 2 or more demands at the same time select form
any who demanded
Article 1218
Payment by a solidary debtor shall not entitle him to
reimbursement from his co-debtors if such payment is made after the
obligation has prescribed or become illegal.
-

Payment by a solidary debtor shall not entitle him to

reimbursement from his co-debtors if such payment is made after
the obligation has prescribed or become illegal
Note: if debtor A paid C without knowing that the debt had
prescribed, A can recover from C on the basis of solution indebiti

Prescription one of the modes of extinguishing obligation. (prescriptive

period for the creditor to collect)
Article 1219
The remission made by the creditor of the share which affects
one of the solidary debtors does not release the latter from his
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

responsibility towards the co-debtors, in case the debt had been totally paid
by anyone of them before the remission was effected.

iv.
v.

The remission (or condonation) made by the creditor of the share

which affects one of the solidary debtors does not release the
latter from his responsibility towards the co-debtors, in case the
debt had been totally paid by anyone of them before the
remission was effected
Reason: since payment extinguishes the obligation, there is
nothing more to remit!
For this to be valid there should be an acceptance of the debtordonee (if you did not accept the donation through remission, then
your obligation is not extinguished)

Article 1220
The remission of the whole obligation, obtained by one of the
solidary debtors, does not entitle him to reimbursement from his codebtors.
-

The remission of the whole obligation, obtained by one of the

solidary debtor, does not entitle him to reimbursement from his
co-debtors
Reason: there is nothing to reimburse because the debtor himself
who offered payment did not really pay anything at all.

Article 1221
If the thing has been lost or if the prestation has become
impossible without the fault of the solidary debtors, the obligation shall be
extinguished.
If there was fault on the part of any one of them, all shall be
responsible to the creditor, for the price and the payment of damages and
interest, without prejudice to their action against the guilty or negligent
debtor.
If through a fortuitous event, the thing is lost or the performance
has become impossible after one of the solidary debtors has incurred in
delay through the judicial or extrajudicial demand upon him by the creditor,
the provisions of the preceding paragraph shall apply.
-

Contemplates on effect of loss or impossibility:

o
If without fault of solidary debtors no liability
o
If with fault there is liability for all debtors but
subject for reimbursement of the payment of damages
from the debtor who is at fault (also for damages and
interest)
o
Loss because of a fortuitous event AFTER default
here there will be liability because of the DEFAULT
(same provision of second situation)

Article 1222
A solidary debtor may, in actions filed by the creditor, avail
himself of all defenses which are derived from the nature of the obligation
and of those which are personal to him, or pertain to his own share. With
respect to those which personally belong to the others, he may avail himself
thereof only as regards that part of the debt for which the latter are
responsible.
-

Provides for defenses for actions filed by the creditor

Defenses may be a complete defense for all debtors unless such
defense is personal thus applicable only to one or few

Kinds of Defenses
a.
Derived from NATURE of the obligation (this is a COMPLETE defense)
i. Lack of consideration or cause
ii. Absolute simulation (contract is totally fictitious)
iii. Illegal consideration
18

vi.
vii.
viii.

b.

Extinguishment of obligation (whole debt is paid, remitted,

or has prescribed)
Non-fulfillment of the suspensive condition (if made upon
the whole object or upon all the debtors)
Stature of frauds
When ALL debtors are incapacitated to give consent
When there are VICES OF CONSENT (vitiated consent) on the
part of ALL the debtors

Those that are PERSONAL to the debtor sued (also a COMPLETE

defense unless the defense is NON-FULFILLMENT YET of a
CONDITION or the NON-ARRIVAL YET of the term, this is only a
PARTIAL DEFENSE)

Complete defense
1.
Derived from the nature of the obligation
2.
Personal to the debtor
Partial defense
1.
Personal defense of his co-debtor
Note: The contract entered into by the minors is voidable.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS
Article 1223
The divisibility or indivisibility of the things that are the object of
obligations in which there is only one debtor and only one creditor does not
alter or modify the provisions of Chapter 2 of this Title.
-

Contemplates on divisible and indivisible obligation

Divisibility or indivisibility refers to the nature of the obligation
whether it is capable of partial performance or not

Divisible obligation
One capable of partial performance
Kinds of Division
o
QUANTITATIVE division depends on quantity
o
QUALITATIVE division depends on quality,
irrespective of quantity; ex. One child inherits land, the
other inherit cash
o
INTELLECTUAL OR MORAL division one that exists
merely in the mind, and not in physical reality; ex.
Sisters owning a common car, the half share is only in
the mind
Indivisible obligation
One not capable of partial performance
Kinds of Indivisibility
o
CONVENTIONAL indivisibility made by common
agreement
o
NATURAL or ABSOLUTE indivisibility it is due to the
nature of the object of undertaking; ex. Trip to manila
o
LEGAL indivisibility if so provided by law
INDIVISIBLITY vs. SOLIDARITY
INDIVISIBLITY
1. Refers to the nature of obligation
2. May exist even if there is only one
debtor and only one creditor
3. the fault of one is not the fault of
the other (can be a joint)

SOLIDARITY
1. Refers to tie between the parties
2. Needs at least two debtors or
creditors
3. The fault of one is the fault of
others

Article 1224
A joint indivisible obligation gives rise to indemnity for damages
from the time anyone of the debtors does not comply with his undertaking.
The debtors who may have been ready to fulfill their promises shall not
contribute to the indemnity beyond the corresponding portion of the price
of the thing or of the value of the service in which the obligation consists.
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

A joint indivisible obligation gives rise to indemnity for damages

from the time anyone of the debtors does not comply with his
undertaking
Here, the object is INDIVISIBLE and yet the parties are merely
bound JOINTLY

Effect of noncompliance:
1.
If joint indivisible: The obligation is converted into a monetary one
for indemnity.
The kind of obligation can be enforced only by
proceeding against ALL of the debtors. If anyone of the
debtors should fail or refuse to comply with the
obligation, it is converted into one of indemnity for
damages
Take note: the person who is ready to pay is not liable for
damages.
2.

If solidary indivisible: one of the debtors is liable to pay

everything and can later recover reimbursement from co-debtor

GR: creditor cannot be compelled to receive partial payments and debtor to

pay partial payment.
Exceptions:
1.
When the obligation expressly stipulates the contrary
2.
When the different prestations constituting the objects of the
obligation arte subject to different terms and conditions
3.
When the oblation is in part liquidated and in part unliquidated
Article 1225
For the purposes of the preceding articles, obligations to give
definite things and those which are not susceptible of partial performance
shall be deemed to be indivisible.
When the obligation has for its object the execution of a certain
number of days of work, the accomplishment of work by metrical units, or
analogous things which by their nature are susceptible of partial
performance, it shall be divisible.
However, even though the object or service may be physically
divisible, an obligation is indivisible if so provided by law or intended by the
parties.
In obligations not to do, divisibility or indivisibility shall be
determined by the character of the prestation in each particular case.
-

Contemplates on the following:

o
obligations that are deemed indivisible:

Obligations to give definite things

Those which are not susceptible of partial performance

(ex. Conduct a performance concert)

Even if physically divisible, yet the law provides it to be

indivisible

Even if physically divisible, but the parties intended it

to be indivisible
o

Obligations that are deemed divisible

If it is the execution of a certain number of days of

work

If it is the accomplishment of work by metrical units

If obligation is to pay a certain amount in installments

If it is the accomplishment of work susceptible of

partial performance

Take note: in obligations to do, the presumption is indivisibility. Partial

performance is equal to non-performance. This is the general rule for
indivisible obligations.
19

Q: What is the test of divisibility?

A: whether the obligation is susceptible of partial compliance or not
Q: What is the effect of illegality on a divisible contract?
A: if the illegal term can be separated from the legal ones, the latter may be
enforced.
OBLIGATIONS WITH A PENAL CLAUSE
(book page 324 penal clause defined)
Article 1226
In obligations with a penal clause, the penalty shall substitute
the indemnity for damages and the payment of interests in case of
noncompliance, if there is no stipulation to the contrary. Nevertheless,
damages shall be paid if the obligor refuses to pay the penalty or is guilty of
fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is demandable in
accordance with the provisions of this Code.
Penal Clause
COERCIVE means to obtain from the debtor compliance
It is an ACCESSORY UNDERTAKING to assume greater liability in
case of breach
Purpose: it is to insure the performance of an obligation and also
to substitute for damages and payment of interest incase of
noncompliance (if no stipulation to the contrary)
SUMMARY OF PURPOSE:
1.
To insure the performance of the obligation
2.
To liquidate the amount of damages to be awarded to the injured
party in case of breach of the principal obligation
3.
In certain exceptional cases, to punish the obligor in case of
breach of the obligation
Kinds of Penal Clauses
a.
Legal Penal clause one that is imposed by law
b.
Conventional Penal clause that which has been agreed upon by
the parties
c.
Subsidiary when only the penalty may be asked
d.
Joint when both the principal contract and the penal clause can
be enforced
Q: What is the difference between a penal clause and a condition?
A: A penal clause constitutes an obligation although accessory; the condition
does not. Therefore, the penalty may become demandable in default of the
unperformed principal obligation, and sometimes jointly with it, while the
condition is never demandable
Q: What are the instances that you can demand both the penalty and the
payment for damages?
A:
a.
When there is EXPRESS STIPULATION to the effect that damages
or interest may still be recovered, despite the presence of the
penalty clause
b.
When the debtor refuses to pay the penalty imposed in the
obligation and he is sued
c.
When the debtor is GUILTY of FRAUD or DOLO in the fulfillment of
the obligation. (why? Because there can be renunciation of an
action to enforce liability for future fraud because this is against
public policy and against the express provision of the law.
Note: A penalty may be enforced only when it is DEMANDABLE. Further, the
penalty may be REDUCED if it is INEQUITOUS or UNCONSCIONABLE.
Article 1227
The debtor cannot exempt himself from the performance of the
obligation by paying the penalty, save in the case where this right has been
expressly reserved for him. Neither can the creditor demand the fulfillment
angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion

of the obligation and the satisfaction of the penalty at the same time,
unless this right has been clearly granted him. However, if after the creditor
has decided to require the fulfillment of the obligation, the performance
thereof should become impossible without his fault, the penalty may be
enforced.
-

Contemplates on the limitation on the right of the debtor and that

of the creditor:
Generally, debtor cannot substitute penalty for the principal
obligation except if such right has been EXPRESSLY reserved
Generally, creditor cannot demand both fulfillment and the
penalty at the same time except if such right has been CLEARLY
granted to him

Article 1228
Proof of actual damages suffered by the creditor is not necessary
in order that the penalty may be demanded.
-

Proof of actual damages suffered by the creditor is NOT

NECESSARY in order that the penalty may be demanded
Proof is not needed because the penalty is considered as a
LAWFUL means for repairing losses and damages
Advantage: even if the actual damage is less than what was
stipulated, you can still collect such without proving it

Article 1229
The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even
if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.
-

Contemplates on situations when the penalty may be reduced by

the court:
o
When the obligation has been partly complied with by
the debtor
o
When the obligation has been irregularly complied
with by the debtor
o
When the penalty is iniquitous or unconscionable,
even if there has been no performance at all

Note: Penalties which are iniquitous or unconscionable is NOT VOID, but

subject merely to equitable reduction.
Q: What are the situations wherein penal clause cannot be enforced?
A:
1.
The breach is the fault of the creditor
2.
A fortuitous event intervened, unless the debtor expressly agreed
on his liability in case of fortuitous events
3.
The debtor is not yet in default
Article 1230
The nullity of the penal clause does not carry with it that of the
principal obligation.
The nullity of the principal obligation carries with it that of the
penal clause.
-

the nullity of the penal clause does not carry with it that of the
principal obligation
the nullity of the principal obligation carries with it that of the
penal clause
this is based on the principle that the accessory follows the
principal and not the other way around
reason: the penal clause is merely an access

20

angels notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencias Class Discussion